After reaching multi-decade highs of 27.60 per US dollar in mid-January, over the last three weeks, TWD has weakened 0.7% against the greenback. Analysts at Credit Suisse think USD/TWD will trade higher in a 27.50-28.00 range. 

A rush for hedging can add additional USD/TWD selling pressure

“The prospects of Fed hikes and intervention by CBC suggest the key 27.50 in USDTWD will not break in the next six months.”

“Since Fed hawkishness and US rates volatility is set to continue as global FX markets’ main theme, we think USD/TWD will trade higher in a 27.50-28.00 range in Q1 as Taiwan life insurers increase unhedged exposure to USD assets.”

“If export flows push USD/TWD back towards 27.50, a rush for hedging can add additional USD/TWD selling pressure.”